During last week’s class discussion, the topic of “first
mover advantage” came about when we began to discuss Amazon’s growing business.
There are many pro’s and con’s to having the first mover advantage but based on
the following notes, I think it is more beneficial to be the first to market.
One of the pro’s in having the first mover advantage is
that it makes it difficult for competitors to gain traction in the market. This
is true especially when a company has filed for patents, licensing, or any
other intellectual property. Having the first mover advantage also allows a
company to be the first at reaching out to investors in hopes to obtain more funding.
Another first mover advantage is that it entitles the company to have control
over the cost of their new product and/or service. Since the customer(s) don’t
have other products or services to compare to, the company can put a value on
their product/service higher than someone entering an already saturated market.
While there are pro’s to having the first mover
advantage, there are also some con’s to consider. One con to the first mover
advantage is if a company doesn’t actively look at expanding into other market
segments they could be too far into the product life cycle and lose traction
against competition. Another con is that a “fast follower” could examine their
marketing strategy and develop one that is better and draws more attention to
customers. Lastly, the first mover also imposes the risk of having more upfront
costs than first followers.
